Employee-owned Blue Heron had been trying to reorganize in Chapter 11. The producer of newsprint and specialty paper products filed for bankruptcy on Dec. 31, 2009, citing a sharp drop in product demand and rising utility rates. Two weeks later, it laid off 50 of its 216 workers.

"The initial plan was successful in restoring profitability and the company received meaningful support from its suppliers and other creditors," said Blue Heron President Mike Siebers in the statement, "but lately those profits began to erode due to escalating waste paper prices and limited availability of that raw material."

Siebers went on to say that prices for the recycled fiber that Blue Heron used in its products had been driven up by Chinese producers "who are subsidized by their parent countries. ...This allows them to drive up the price of waste paper to unsustainably high levels."

Siebers said it is unclear whether the plant would reopen.

Greg Pallesen, vice president of the Association of Western Pulp & Paper Workers, said Blue Heron workers are certified to receive Trade Act benefits, which can include tuition for retraining and the ability to continue collecting unemployment while in school.